FirstGroup first-quarter trading in line with management expectations

14th Jul 2015 08:41

(ShareCast News) - Transport operator FirstGroup said on Tuesday that it traded in line with its expectations in the first quarter, with strong growth in the UK rail division.The company said UK Rail like-for-like passenger revenue grew 6.3%, underpinned by robust volume growth. However, it said the division's contribution to group earnings will be substantially lower in the first half and for the current year, following the end of the First Capital Connect and First ScotRail franchises.In UK Bus, like-for-like revenue increased 1.4%, with commercial passenger revenue continuing to grow at more than 2%, partially offset by a decrease in concessionary revenue.As expected, the Greyhound business continued to experience the adverse effect of lower fuel prices on demand, the company said, adding that it was actively managing its cost base to mitigate this impact. LFL revenue fell by 5.7% in the first quarter and FirstGroup expects year-on-year growth to remain challenging throughout the first half of the current year.Greyhound Express remained more resilient, with like-for-like revenues decreasing by 2.1% in the first quarter.Chief executive Tim O'Toole said: "We are on track to meet our financial objectives through our multi-year transformation plans, and thereby return to a position of sustainable strong cash flow and value creation."Shore Capital said: "While there is little by the way of comment on specific numbers, FirstGroup's Q1 trading statement is in line with our and we believe market forecasts and we expect no change to our group forecasts for the year ahead."It added: "With S&P recently upgrading its credit rating outlook and the business on track to achieve its targets, it is in our opinion only a matter of time before the market turns its attention to the repayment of debt and potential transformational impact this could have on cash flow."Shore rates the stock at 'buy'.At 08:23, shares were down 0.3% at 118.80p.